Confidence in business outlook reached its highest point in the 21-year history of the professional practices survey, conducted by , the accountancy, investment management and tax group. 99% of respondent firms cited a positive outlook for the year ahead, up from 96% in 2014 and exceeding the previous high point of 98% in 2006.
John Hodgson, head of tax and business services at the Birmingham office of Smith & Williamson, said:
“The survey shows that professional service firms in the Midlands are enjoying an unprecedented level of confidence. This is a genuine signal that activity is now exceeding the levels seen before the financial crisis. Political certainty, economic resurgence and corporate actions are driving optimism.”
This optimism is also demonstrated by the 80% of respondents from the region who believe the outlook for their business has strengthened since the May general election.
However, widespread changes in the professional services market, driven largely by new entrants to the sector and new ways of working are making the environment increasingly competitive for the sector. Mr
Hodgson remarked “Professional firms are being squeezed on all sides by the arrival of new business models and new entrants to the market. In particular, all firms face a massive threat from new uses of technology to gain and interact with clients.” He continued:
“Firms need to develop a ‘clear differentiator’ to stand out from the crowd, thereby demonstrating the value they deliver and to help them resist downward pressure from clients on fees.”
Lateral hires and further investment for the Midlands’ firms
Around a third of the region’s respondents are seeking to make a ‘significant increase’ in lateral hires in the coming year. And as a result Mr Hodgson believes that higher levels of team ‘poaching’ in the region are almost inevitable in the current climate.
Reward and remuneration models are coming under review and the survey shows that according to respondents from the Midlands, a little more than half of participating firms rely on a modified lock-step model or merit awards, with the remainder preferring equal shares for partners.
The survey also suggests that just under two thirds of firms in the Midlands are planning to increase the range of services they offer in the next twelve months, and a similar proportion are proposing to increase their office space.
However, Mr Hodgson cautions: “So while the majority are trying to up their game, any firm lacking an appetite for change or without strategic vision and drive to differentiate themselves in today’s fast-changing market could suffer the consequences. With the economy currently relatively benign, now is the time to face any tough strategic decisions and to invest appropriately to build the business.”